Gilfillan v Skein[2022] QDC 65

DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   This is an appeal from an order of the Magistrates Court at Southport made on 14 May 2021 refusing to grant summary judgment in favour of the appellants on their claim as well as on the respondents’ counter claim.
2. [2]
   The underlying claim by the appellants is for the balance deposit payable on a contract in writing dated 7 July 2020 between the appellants as sellers and the respondents as buyers in respect of a property situated at 3 Spinnaker Court, Currumbin Waters in the State of Queensland.  The appellants’ position is that on 22 July 2020 the building and pest condition to which the contract was subject was satisfied and the contract became unconditional.  The respondents are also said to have been in breach of the obligation to pay the balance deposit by 20 July 2020.  The appellants claim that time was of the essence in respect of that obligation.  It is further claimed that the respondents repudiated by a text message of 24 July 2020 (which is at page 147 of the appeal book).  It is said that at no time did the appellants elect to affirm and instead they continually reserved their rights arising out of the respondents’ breaches and terminated on 10 August 2020 which letter is at page 153 of the appeal book.
3. [3]
   The respondents’ position is that they were not in breach of contract with respect to payment of the balance deposit in circumstances of the alleged waiver by the appellants and that the appellants elected to affirm despite this breach and the alleged repudiation.  Also, the respondents contend that the text of 24 July 2020 was not such as would convey to a reasonable person in the situation of the appellants that the respondents were unwilling to render substantial performance of the contract such as to give rise to repudiation.  I have had regard to the test as articulated by the majority of the High Court in Koompahtoo local Aboriginal land Council v Sanpine Pty Ltd and Anor (2007) 233 CLR 115 at [44].  This communication used to be relied upon by the respondents as constituting their termination of the contract in reliance on the building and pest clause as can be seen from sub-paragraph 30(b) and footnote 19 of the original submissions, although that submission is now withdrawn.  That submission having been made as to how that text might be construed makes it a little difficult to contend that such a construction is not open.  Also, the respondents contend that correspondence dated 17 July 2020 (but sent on 20 July 2020) from their solicitors to the appellants solicitors (who were in fact the same) had the effect of communicating termination of the contract in the absence of agreement of the appellants to reduce the purchase price by $5,000.
4. [4]
   Further, before her Honour the central issue was as to the instructions given to the respondents’ solicitor prior to the correspondence of 22 July which stated that the buyers were satisfied with the building and pest inspection and that the contract was now unconditional and due for settlement on 21 August 2020.  On the application the respondents’ position was that the first respondent did not tell the solicitors that she was satisfied with the building and pest inspection but instead that she wished to discuss this with Mr Flew who had not had an opportunity to look at the property or study the building and pest report.^[1]  That was a matter which was critical to her Honour’s reasons for judgment and to the outcome of the application as will be apparent from the matters I consider below.  As it turns out, that position was abandoned after the appeal was filed including some of the submissions.  The topic was the subject of significant debate in the appellants’ first and second submissions as well as the respondents’ first.  It was abandoned in the second submissions of the respondents.  The appellants responded in a third set of submissions. 
5. [5]
   The result of this focus on whether such instructions were given was significant below because perhaps not as unusually as one might hope there was the undesirable feature in this matter that the one firm of solicitors acted for both the sellers and the buyers.  In her Honour’s mind, quite correctly in my view, that raised real questions as to the actual instructions that had been provided to the solicitors on the topic I have mentioned.  Because the solicitors were acting for both sides, what they may have known as to the respondents’ instructions would mean that they also knew that in their capacity as solicitors for the sellers.  Her Honour thought that there was a triable issue as to what instructions were in fact given.  Her Honour identified that in her view the situation may well have been different had the sellers and the buyers been represented by different solicitors.  In those circumstances an allegation by the buyers that they had not instructed the solicitors in the way they corresponded would have led only to claim as against that solicitor by the buyers.
6. [6]
   As I have said though this matter has now been abandoned.  It was unfortunate that her Honour was incorrectly informed as to this issue because it meant that she was misled as to a factor with, in my view, clear capacity to give rise to a triable issue.  It was the focus below and for the first 6 months after the notice of appeal was filed.

Nature of the appeal

7. [7]
   The appeal is pursuant to s 45 of the Magistrates Courts Act 1921 (Qld) which provides for the right of appeal for parties dissatisfied with the judgment or order of a Magistrates Court to appeal to the District Court.

8. [8]
   Section 113 of the District Court of Queensland Act 1967 (Qld) provides:

“113 Power of District Court on appeal from Magistrates Court

The District Court has, for an appeal from a Magistrates Court, the same powers as the Court of Appeal has to hear an appeal.”

9. [9]
   This appeal is by way of rehearing.^[2] In such an appeal the Court must make up its own mind on the evidence that was before the Magistrates Court giving “due deference and weight” to the learned magistrate’s view.  To succeed the appellant must show the decision appealed from was wrong.^[3]  As to this, in Teelow v Commissioner of Police [2009] 2 Qd R 489 Muir JA stated with my underlining at [4]:

“It is a normal attribute of an appeal by way of rehearing that the powers of the appellate court are exercisable only where the appellant can demonstrate that, having regard to all of the evidence now before the appellate court, the order that is the subject of the appeal is a result of some legal, factual or discretionary error …”

10. [10]
    By virtue of r 785, r 766(1) is also applicable. Rule 766(1) provides for the general powers of, on this occasion, this court with respect to the appeal.
11. [11]
    This is an appeal against a refusal to grant summary judgment.  The principles relevant on an application for summary judgment whether under rule 292 or 293 of the UCPR are well-known and need not be set out.  Such a decision is a discretionary one with such discretion only arising for consideration upon satisfaction of the two conditions precedent being whether or not the respondent to the application has no real prospects and whether or not there is a need for a trial.   There remains a residual discretion as is clear from Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232 at [45] per Williams JA with whom the President and Atkinson J agreed.

Grounds of appeal

12. [12]
    The notice of appeal filed 6 June 2021 claims that:

    1. (a)
       the learned Magistrate erred in fact and in law in wrongly exercising discretion under rule 293 dismissing the appellants’ application for summary judgment essentially on the basis that the respondents had failed to pay the balance deposit on 20 July 2020 and otherwise repudiated the contract on 24 July 2020 such that the contract was lawfully terminated on 10 August 2020;
    2. (b)
       the learned Magistrate erred as a matter of law by relying on matters irrelevant to the exercise of her Honour’s discretion being that the appellants and the respondents were represented by the same solicitors and that the position may have been different if there had been solicitors for each of the sellers and the buyers and that there was a triable issue as to the instructions given by the respondents to their solicitors preceding the notification on 22 July 2020.
13. [13]
    The orders sought are that the appeal be allowed and summary judgment be granted with costs.

Submissions on appeal

The appellants

14. [14]
    The appellants contend that:

    1. (a)
       they lawfully terminated the contract on 24 August 2020 based on the respondents’ fundamental breaches of contract including their repudiation;^[4]
    2. (b)
       Her Honour failed to give any weight to the respondents’ failure to pay the balance deposit by 20 July 2020 (a fundamental breach of contract) which entitled the appellants to terminate by their notice on 10 August 2020 and as the contract became unconditional on 22 July 2020, the respondents repudiated the contract on 24 July 2020 by stating that they were not proceeding with the contract;
    3. (c)
       the learned Magistrate’s failure to give weight to these “undisputed and insurmountable facts” constituted a fundamental error of law.  Before her Honour, as will be seen from matters I address shortly, there was a serious dispute as to whether the contract had become unconditional on 22 July 2020.  It also seems to me arguable that there was waiver of essentiality of time with respect to the requirement to pay the balance deposit or that the appellants elected to affirm the contract notwithstanding that breach;
    4. (d)
       in paragraph [17] of the appellants’ outline of argument it is identified that the fundamental premise for her Honour’s refusal was that the appellants and respondents were represented by the same solicitors and in her view there was a triable issue as to the content of the respondents’ instructions to those solicitors underlying the notice to “go unconditional on 22 July 2020”.  I accept that this was the fundamental premise of the judgment and as I have said it was wrong because her Honour was told the wrong thing by the respondents;
    5. (e)
       that those cornerstones of her Honour’s decision were both irrelevant and extraneous to the exercise of discretion because, as seems to be the submission, a purchaser is bound by the communication given by its solicitor - the same solicitor (that is, itself) on the other side of the transaction even if the solicitor had been given different instructions to those purportedly conveyed.^[5]  As will be clear from what I will shortly address I do not accept that these matters were irrelevant or extraneous.  They were clearly important but unfortunately they were based on the misstated position as to the instructions given in relation to the 22 July 2020 letter.  It is important that I continue to refer to them though because, I do not want it to be thought that I otherwise would have accepted the appellants’ criticisms of decision as to this issue and because, in my view, it is important to recognise that the decision below was in my view correct on the then state of the matter.

The respondents’ submissions

15. [15]
    The respondents’ position is that the learned magistrate made no appealable error.
16. [16]
    In their first outline, this was submitted to be so because:

    1. (a)
       the repudiation argument is beyond the appellants’ pleading and the balance deposit was clearly not intended by the parties to be payable until the building and pest was satisfied, such that, subject to submissions about the correspondence of 22 July 2020, there was no failure to pay it which would give rise to a right to terminate;
    2. (b)
       the conflicting joint representation was said to be relevant because the knowledge of a solicitor as agent is imputed as actual knowledge of the principal;^[6]
    3. (c)
       where there is no suggestion that there were steps taken to separate functions within the firm, there is at least a triable issue as to the imputation of knowledge of the respondents’ true instructions to the appellants.^[7]  These two matters are now abandoned although it was said that perhaps a conversation between Ms Skein and a paralegal on 17 or perhaps 20 July 2020 could give rise to an inference that the solicitors knew that the respondents wished to communicate a conditional termination of the contract unless there was a $5,000 reduction.  I do not regard the conversation as giving rise to such an inference.  I of course say nothing as to whether the solicitors ought to have explored further what the respondents wished to do in this respect because that is irrelevant to this matter;
    4. (d)
       the learned Magistrate is submitted to have properly recorded the effect of the respondents’ case being that they terminated the contract in reliance on an unsatisfactory building and pest inspection by reason of the text message on 24 July 2020, being the text which is now said to be not sufficiently unequivocal.  That, unsurprisingly, made critical what instructions were in fact given to the respondents’ solicitors, given that their knowledge was also to be imputed to the appellants in light of the common representation;
    5. (e)
       the correspondence quoted by the learned Magistrate indicates that she considered all of the correspondence and it is submitted that properly interpreted, it may be itself amount to termination of the contract upon failure to accept the respondents’ conditions expressed therein.  The appellants submit that is not the proper construction of the correspondence and instead all that was put as at 17 or perhaps 20 July 2020 was an offer to proceed with a reduction in price which was not accepted.  In my view, the appellants’ construction of this correspondence is correct.  It seems to me to clearly be an offer to resolve the building and pest issue on a particular basis but I do not consider that it was a conditional termination having automatic effect.  Originally the argument was said to be enhanced for the respondents by the fact that the correspondence was sent on 17 July which was the relevant date for the condition.  The difficultly with that is that it seems that it was in fact not sent until 20 July which removes this support for the contended construction.  In any case, the communication on 22 July 2020 causes significant difficulty for an argument as to automatic termination in this respect because the contract was thereby rendered unconditional given the admission as to the instructions given to the solicitor;
    6. (f)
       the learned Magistrate was aware of what the correspondence on 22 July 2020 provided on its face and thus consideration of whether the appellants were or may have been fixed with the knowledge of the true instructions from the respondents in the context of the case as a whole, was an appropriate matter for consideration at least as things stood before the admission her Honour had been incorrectly informed in this respect;
    7. (g)
       the termination was asserted to based solely on the non-payment of the deposit and the requirement for payment of the balance deposit had been waived or at least essentiality of time had been waived;^[8]
    8. (h)
       as to the repudiation issue, it is again submitted that repudiation is beyond the appellants’ statement of claim and accordingly not susceptible to summary judgment.  That alleged repudiation was either after the respondents’ termination, based on the argument set out in sub-paragraph 30(a) of the respondents’ outline on appeal or it constituted valid termination by the respondent in reliance upon the building and pest clause.

Appellants’ submissions in reply

17. [17]
    The appellants submit that:

    1. (a)
       Paragraphs [37] to [42] of the reply filed 20 April 2021, which was the extant reply at the time, specifically plead the repudiation issue and otherwise pursuant to the well-known principle in Shepherd v Felt & Textiles of Australia Limited [1931] ALR 194 they were entitled to rely upon any legitimate ground of termination which was available.^[9]  I am satisfied both that the matter was pleaded and that the appellants were able to rely on the alleged repudiation as supporting their attempted termination by letter dated 10 August 2020;
    2. (b)
       it is said that the authorities cited in paragraph [12] of the respondents’ outline were distinguishable and did not bear upon the outcome of the appeal.  That seems to have been said because of some factual matters said to be relevant to the scope of the retainer.  Those matters specifically address the solicitors being prevented from disclosing information.  It is not immediately obvious how that would prevent the appellants being fixed with knowledge of an instruction which is directly contrary to the what the solicitors communicated to themselves acting for the appellants.  Issues of alleged privilege are raised on the submissions but they do not grapple with how it is that this rendered the cases as to agency inapplicable.  It also raises another issue that would have to have been determined, being the scope of the retainer between the respondents and their solicitors which it would seem to me would have raised another triable issue.  It is not at all clear how such an instruction would attract legal professional privilege.  It is not seeking or conveying advice and it is not intended to be confidential – it is to be communicated to the other contracting party.  As I have mentioned, in my view, it is important to make these observations given the basis upon which the matter was run before her Honour;
    3. (c)
       as I have mentioned supplementary submissions were provided by the respondents and the appellants also responded to those.  The effect of the respondents’ supplementary outline was to abandon the core issue which was raised before the learned Magistrate being whether or not the correspondence of 22 July 2020 was authorised.  Matters as to the alleged election to affirm the contract in spite of the breach regarding the balance deposit and waiver of the essentiality of time are reiterated.
    4. (d)
       it is said that the circumstance of common representation of both parties remains relevant to the interpretation of the correspondence.  When Mr Taylor who appeared for the respondents was pressed as to what that meant and whether there was any proposal to plead anything in relation to it, it was said to be predominantly relevant to the correspondence dated 17 July 2020 and the matter was stood down so that instructions as to the conversation between Ms Skein and the solicitors could be obtained, so that I could understand whether, despite the seemingly insurmountable hurdles facing the respondents since the admission that instruction were given in relation to the 22 July correspondence, there might be some issue which ought to be determined at trial.
    5. (e)
       in the appellants’ reply to the respondents’ supplementary submissions the appellants submit that the issue that formed the fundamental basis of her Honour’s decision to refuse summary judgment at first instance had been abandoned with the consequence that it must be taken as accepted that the respondents’ solicitors had authority to notify that the contract was unconditional in all respects on 22 July 2020.  It was submitted that the respondents’ proposition that the correspondence of the solicitors must be construed in a manner inconsistent with its objective meaning lacked merit.  It will be apparent from what I have already said that I accept that argument in respect of the correspondence dated 17 July 2020.
    6. (f)
       otherwise, it was reiterated that the respondents’ text was submitted to constitute unequivocal advice that they were not proceeding with the contract.  Given, it was once pointed to as constituting a clear expression of termination, that submission is hard to resist.

The learned magistrate’s reasons

18. [18]
    Her Honour firstly addressed the principles relevant to summary judgment including the well-known statements from Coldham-Fussell & Ors v Commissioner of Taxation [2011] QCA 45 amongst other authorities and observed that the discretion whether to order summary judgment was not one to be exercised lightly and was to be exercised with great care and appropriate caution and only in the clearest cases.  Her Honour was clearly of the view that this was not one of those cases.  Her Honour recorded that her understanding of the case was that the respondents claimed to have terminated the contract in reliance upon an unsatisfactory building and pest inspection.  She went through and considered the correspondence directed to that issue in significant detail.  The last document considered was Ms Skein’s text message which referred to there being pressure from the solicitor seemingly because Ms Skein had said that she was not satisfied with the building and pest report and needed to wait until Mr Flew had had a look before going unconditional.  She recorded that the appellants submitted that the evidence of waiver of the building and pest condition and subsequent repudiation was unequivocal.  Nonetheless, her Honour was cautious given Ms Skein’s submissions that she did not instruct the solicitors to advise that the building and pest condition was satisfied. 
19. [19]
    I would not be satisfied that there is any indication of error in her Honour’s approach in the absence of the admission as to the false basis she was lead to decide the matter on.  To the contrary, I agree with the approach she took and consider that there appeared a clear triable issue as to the terms of the instructions leading to the letter of 22 July to the effect that the contract was unconditional as a result of satisfaction with the building and pest report.
20. [20]
    In my view, there was a strong argument as to imputed knowledge in the appellants of the true instruction to the common solicitors, whatever that might have been.  I do not consider there is any basis upon which this principle dealt with in the cases referred to in paragraph [12] of the respondents’ outline and Halifax Mortgage Services Ltd v Stepsky [1996] Ch 1 as referred to by the appellants did not apply.  Nor was the apparent situation anything like that in Halifax where the solicitor was not at liberty to communicate knowledge of the true purpose of the loan to the lenders.
21. [21]
    I have set out my views on the attribution issue in part to assist understanding of why I do not think her Honour made any error other than proceeding on the false basis presented to her, but also because I do not want it to be thought that I agree with the arguments put by the appellants as to these issues.

Disposition

22. [22]
    The change in position of the respondents as to the absence of authority to advise the contract was unconditional, has been taken into account by me on the appeal in accordance with rules 766 and / or 768.  For the reasons expressed I consider that it might be that there was either a waiver of the essentiality of time in respect of the obligation to pay the balance deposit or there was an election to affirm notwithstanding the breach in that respect, but that the construction contended for by the appellants as to the 17 July letter is to be preferred and I accept that the text of 24 July 2020 constituted a repudiation of the respondents’ obligations under the contract which was accepted by the appellants by their letter of 10 August 2020.
23. [23]
    It follows, in my view, that the appellant has demonstrated a discretionary error by having regard to the evidence which is only now before the court.  My powers on appeal include to substitute my own decision on the facts as they now stand.
24. [24]
    In my view, there is no need for a trial of the claim or counterclaim and I am satisfied that the respondents have no real prospects.

Orders

25. [25]
    Accordingly, the appeal will be allowed and the orders made set aside.  In lieu thereof there will be orders that judgment be entered for the appellants pursuant to r 292 and 293 on the claim and counterclaim and that the respondents pay the appellants costs of the proceeding and the appeal.